Wednesday, October 19, 2016

Legal Settlements to Remind Us How Our Health Care System Became Rigged: by GSK, Novartis, CVS

Amidst the sound and fury of the US election season, almost under the radar sneak legal settlements demonstrating continuing bad behavior by big health care organizations, and the continuing lack of accountablity of these organizations' leaders.

We note three cases involving unethical practices leading to overuse of pharmaceuticals that appeared in the last two months, in chronological and alphabetical order.

GlaxoSmithKline Settles Charges of Bribing Chinese Doctors

A summary from Stat by Ed Silverman on September 30, 2016,

GlaxoSmithKline on Friday agreed to pay $20 million to settle charges of violating the Foreign Corrupt Practices Act for what authorities called a pay-to-prescribe scheme in China. In doing so, Glaxo becomes the latest global drug maker to face such accusations as part of a long-running probe by US authorities into companies that paid bribes overseas in order to boost sales of their medicines.

The settlement is an outgrowth of the bribery scandal that rocked Glaxo and resulted in a $490 million fine two years ago after a Chinese court found the company guilty of bribing doctors, hospital officials, and other non-governmental personnel. The former head of the Glaxo unit in China also pleaded guilty to bribery-related charges and was given a three-year suspended sentence.

As part of the scheme, Glaxo employees allegedly funneled kickbacks through trade groups and travel agencies that planned events. Between 2010 and June 2013, Glaxo spent nearly $225 million on planning and travel services. But after reviewing a sample of invoices, authorities found about 44 percent were inflated and approximately 12 percent were for events that did not occur, according to an SEC order.

In 2010, Glaxo hired a Chinese company to develop a project to provide clinics with tools to store and administer vaccines that required refrigeration. Instead, the project was used to give laptops and other electronic devices as gifts to clinics that were believed to have the potential to market still other Glaxo drugs. In all, the drug maker spent about $2.3 million doing this.

Articles in the Wall Street Journal and Reuters stated the bribes were explicitly meant to boost sales of drugs.  However, I am not able to find any information in the few media reports or the US Securities and Exchange Commission order about which products were so promoted.  It appears likely, however, that these alleged practices led to overuse of drugs that at best did patients no good and at worst caused direct harm. 

Although proceedings in China resulted in punishment of a GSK official there, the US proceedings did not subject any individual to negative consequences for enabling, authorizing, directing or implementing any bribes.

Note that our posts on previous misadventures by GSK can be found here.

Novartis Settles Charges of Illegally Promoting Skin Cream for Infants in the US

Again, as summarized by Ed Silverman in Stat on October 5, 2016,

Novartis has agreed to pay $35 million to settle charges of illegally promoting a prescription skin cream for use with infants and toddlers. The deal marks the second time in the past year the drug maker has struck a deal with US authorities to resolve allegations of improperly marketing its medicines.

The agreement, announced on Wednesday, stems from a whistleblower lawsuit filed by a former Novartis sales representative, who accused the company of deliberately trying to widen the market for Elidel by encouraging prescriptions for children younger than 24 months, even though the medicine was not approved for that patient population. At one point, regulators issued a warning about the risk of cancer in small children.

'We were instructed that Elidel was so safe it could be put on up to 80 percent of a baby’s body. And we were never told that it might cause cancer,' said Donald Galmines, 44, the former rep, in a statement. He added that he was trained to invite doctors and their families or staffs to dinners at expensive restaurants, even though during the course of the meal, Elidel might not even be brought up.

The illegal marketing occurred between 2002 and 2009,...

So this case involved allegations of deceptive marketing.  In particular, the deception was potentially dangerous to infant patients, since it appears that the drug promoted was unduly dangerous.

In this settlement, however, the company got to explicitly deny wrongdoing.

Novartis denied the allegations in the settlement agreement.

Novartis has had considerable recent legal trouble involving unethical behavior.

The settlement comes amid a difficult stretch for Novartis. The drug maker last year paid $390 million to settle charges of paying kickbacks to boost sales of two other drugs. And the company is facing a trial stemming from yet another whistleblower lawsuit filed by a different former sales rep, who similarly alleged Novartis illegally marketed medicines.

Those cases gained considerable attention because US Attorney Preet Bharara, who is based in New York, claimed Novartis is a repeat offender when he announced the government had joined the lawsuits in 2013. He was referring to a 2010 case in which the company paid $422.5 million for allegedly marketing six drugs off-label and paying kickbacks to health care professionals.

The United States is not the only venue where Novartis has encountered such charges. Last March, the drug maker agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act by making illegal payments to health care providers in China. Employees gave money, gifts, vacations, and entertainment to health care professionals between 2009 and 2011, according to US authorities.
Furthermore, an even more extensive list of previous Novartis misadventures can be found in our post here.

Despite all that, however, the settlement did not subject any individual to negative consequences for enabling, authorizing, directing or implementing the allegedly illegal promotion.

Omnicare Settles Charges of Accepting Kickback to Help Illegally Promote Depakote

Finally, as yet again best summarized by Ed Silverman on StatNews on October 17, 2016,

Omnicare, which is the nation’s largest nursing home pharmacy, agreed on Monday to pay more than $28 million to resolve charges of seeking kickbacks from Abbott Laboratories in exchange for boosting prescriptions for a medicine that the drug maker had promoted illegally.

As part of the scheme, Omnicare disguised the kickbacks from Abbott as grants and educational funding, and took rebates from the drug maker based on the amount of Depakote that was prescribed for each nursing home resident. In addition, Abbott paid for Omnicare management meetings at a Florida resort and offered tickets to sporting events, according to the US Department of Justice.

The arrangement between Omnicare and Abbott began after the drug maker launched a new initiative in 1997 to boost prescriptions for the drug, which is approved for treating seizures, bipolar mania, and migraines, but not uncontrollable behavior due to dementia. The following year, Omnicare began soliciting kickbacks from Abbott and the scheme lasted about three years, according to court documents.

The settlement is the latest in a long-running probe by the feds into Omnicare, which is now owned by CVS, and the interplay between nursing home pharmacies and drug makers.

In 2012, Abbott reached a $1.5 billion global civil and criminal settlement that resolved, among other things, alleged kickbacks paid to nursing home pharmacies. At the time of the agreement, the feds noted that Abbott promoted Depakote for controlling behavioral disturbances in dementia patients, even though the US Food and Drug Administration never approved the pill for this particular use.

'Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs,' said Benjamin Mizer, the principal deputy assistant attorney general in the Justice Department’s Civil Division,...

So it appears that at best the kickbacks led to prescription of drugs that did patients little good, and may have caused adverse effects.  

An article in the Cincinnati Business Courier noted that CVS, of which Omnicare is now a subsidiary, avoided admitting any responsibility for the alleged acceptance of kickbacks,

CVS 'agreed to settle this matter to avoid the expense and uncertainty of protracted litigation,' spokesman Mike DeAngelis said of the suit against Omnicare. 'The activities, which were alleged to have violated anti-kickback laws, all occurred prior to CVS Health’s acquisition of Omnicare. These matters involved Omnicare only, and no allegations were made against any of CVS Health’s other businesses, including CVS Pharmacy and CVS Caremark. CVS Health is committed to the highest standards of ethics and business practices, and there was no admission of wrongdoing.'

An Associated Press article noted Omnicare's previous track record,

Omnicare has spent hundreds of millions of dollars resolving kickback litigation in recent years. In 2014, it agreed to pay more than $124 million to settle lawsuits alleging it gave kickbacks to some facilities so they would keep the company as their drug provider for elderly Medicare and Medicaid recipients.

In 2009, Omnicare said it would pay $98 million to settle allegations that it solicited or paid a variety of kickbacks. That included an accusation that it received kickbacks from Johnson & Johnson for recommending that doctors prescribe to nursing home patients the antipsychotic Risperdal, which can hasten death in elderly people with dementia.

Furthermore, an extensive list of parent company CVS' misadventures can be found in this post.

Despite all that, again, the settlement did not subject any individual to negative consequences for enabling, authorizing, directing or implementing the alleged acceptance of kickbacks.


Three settlements in two months by three major health care corporations involved allegations of unethical behaviors that were meant to increase prescribing of various pharmaceuticals, whether or not patients needed them, or were more likely to be harmed by them.  Despite the unsavory nature of the behaviors, and the likelihood of patient harms, the companies involved had to pay fines that were tiny relative to their multi-billion dollar revenues.  The companies did not have to admit responsibility, and company managers and leaders did not suffer any negative consequences for enabling, authorizing, directing or implementing the bad behavior.  Thus they exhibited impunity.

These cases are just the latest in a long march of legal settlements to remind us of the continuing bad behavior of large health care organizations, and the continuing impunity of their managers and leaders.

This adds to the evidence suggesting that US health care, at least, is rigged to benefit its top insiders and cronies, and as such, is part of a larger rigged system.  We have previously discussed how market fundamentalism (or neoliberalism) led to deregulation, which enabled deception, fraud, bribery, and intimidation to become standard business practices, and allowed increasing concentration of power by large corporations. Managerialism allowed the top leaders of these corporations and their insider cronies to amass increasing power and money. Everyone else, other employees, stockholders of public corporations, customers, vendors and suppliers, and the public at large lost out. In health care, these changes led to an increasingly costly system which produced increasingly bad results for patients and the public.

We have called for years for what we sometimes term "true health care reform" to derig the system.  Little has changed, while perceptions that the system is rigged have become more common.

Unfortunately, perceptions of a rigged system may not always inspire honest reform. Instead, they can enable the rise of demagogues and would be dictators who promise only they can solve the problem. This appears to have happened in the US. Now honest people who want to unrig the system must first prevent an even worse result, authoritarianism or frank dictatorship.  Never has Benjamin Franklin's warning that we only have "a republic, if you can keep it" been more salient.

However, should we be successful in fending off despotism, the original problems that led the system to be rigged will remain, and new men on white horses may appear, unless we truly reform the system. 

So let us not forget how we got here in the first place.  And should we successfully preserve our republic, let us remember the need for wholesale, real health care reform that would make health care leaders accountable for what their organizations do, particularly when these organizations misbehave.

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